Question

Table 7.5

Units Purchased Blueberries 8 Pineapples 5 Cheese 2013 $2.00 $2.00 $2.50 Price per Unitin 2014 2015 2016 $2.00 $2.10 $2.40 $2.50 $2.50 $3.00 $3.00 $3.50 $4.00

Refer to Table 7.5. Suppose 2014 is the base year. The price index in 2014 is?
Refer to Table 7.5. If 2014 is the base year, the price index in 2013 is?

If 2015 is the base year and the inflation rate between 2015 and 2016 is 6.4%, the price index in 2016 is?

If 2015 is the base year and the inflation rate between 2015 and 2016 is -4.5, the price index in 2016 is?

If the CPI in 2015 was 104 and the CPI in 2016 was 106, then the rate of inflation between 2015 and 2016 was

Answer 1

1) Solution: 100

Explanation: Base year price index equals 100

2) Solution: 89.3

Explanation:

	Units Purchased	2013	2,014	2013	2014
Blueberries	8	2	2	16	16
Pineapples	5	2	2.5	10	12.5
Cheese	3	2.5	3	7.5	9
				33.5	37.5

33.5/37.5 * 100 = 89.3%

3) Solution: 106.4

Explanation: 100% + 6.4% = 106.4%

4) Solution: 95.5%

Explanation:: 100% - 4.5% = 95.5%

5) Solution: 1.92%

Explanation: (CPI in 2016 - CPI in 2015) / CPI in 2016 * 100 = (106 - 104) /104*100 = 1.92%